No 'Blue Wave' In US Midterms, But Notable Ripple Hits Trump

In the November 6 midterm elections, the opposition Democratic Party took control of the House of Representatives in something of a rebuke to the presidency of Donald Trump.

Nevertheless, the Republican Party increased its majority in the Senate, presaging a period of legislative gridlock.

The Democrats also took a number of state governorships from the Republicans, but the GOP’s retention of the governors’ mansions in Florida and Ohio show that Trump and his party still have strong appeal in crucial swing states.

The president’s policy agenda is likely to shift towards foreign policy, with the Democrats likely to use their position as the House majority to frustrate Republican policy making and launch investigations into alleged misconduct by the Trump administration.

Midterm elections to the US Congress on November 6 delivered a split legislature. With results still coming in at the time of writing, the opposition centre-left Democratic Party has won a majority in the House of Representatives, while the centre-right Republican Party of President Donald Trump has increased its majority in the Senate. The result broadly matched our and opinion pollsters’ expectations (see ‘Divided US Government Will Lead To Policy Gridlock’, 23 October), with the Democrats picking up an additional 26 seats so far in the House, taking their total to 219 of 435 compared to the Republicans’ 193. Meanwhile the GOP at present have added three seats to their total in the Senate, currently sitting at 52 out of 100, compared to 45 for the Democrats, with two seats too close to call (Arizona and Montana) and one requiring a run-off election at a later date (Mississippi).

Turnout in many races reached multi-decade highs for a midterm election. This has led analysts to suggest that these votes were a ‘referendum’ on Trump’s tenure, with almost two-thirds of voters saying their vote related to the president, according to CNN exit polls. It should be noted, though, that all midterm elections are something of a referendum on the incumbent administration. Since the end of the US Civil War in 1865 the party of the president has only avoided losing seats in the House in three midterm elections, in 1934, 1998, and 2002. Nevertheless the loss of the House will come as a blow to the president and his party. The loss of many suburban districts with large female electorates exposes an area of vulnerability for the GOP ahead of the 2020 presidential election.

Senate Gains Offer Some Succor To Trump And GOP

United States - Preliminary Senate Results, Seats

Source: Real Clear Politics, Fitch Solutions

In the short-to-medium term, the loss of the House by the Republicans will likely presage two years of legislative gridlock. Given the highly partisan nature of US politics at present, the prospect for significant bipartisan legislation is slim. The passage of the outstanding FY 2019 appropriations bills, and potentially a ‘tax reform 2.0’ will occupy Congress during the lame duck session ending in mid-December, with the former needing to be passed by December 7 in order to avoid a government shutdown. In the 2019 legislative session, healthcare, infrastructure funding, trade and immigration are likely to occupy Congress.

Given that the Democratic Party’s expanded cohort is not a cohesive body, with moderate free-marketeers sitting alongside left-wingers, this will make economic policy formation a tricky prospect. As such, the House will likely concentrate its efforts on launching investigations into alleged wrongdoing and misconduct relating to the Trump administration.

Looking at the Senate, the increase in seats held by the Republicans will be a notable relief to the GOP leadership under Senate Majority Leader Mitch McConnell, as well as President Trump. The GOP majority in the Senate will be able to halt the progress of any legislation or proceedings, should the House seek to enact welfare reforms, roll back the 2017 tax cuts, or even launch impeachment proceedings against the president. The favourable electoral map for the Republicans in 2018 made holding the Senate the most likely outcome for the GOP, with Democrats (unsuccessfully) defending seats historically Republican-leaning states such as North Dakota, Missouri, and Indiana. However, the loss of a senate seat in Nevada and the close contest in historic Republican stronghold Texas highlights that those Midwestern and Western states with shifting demographic profiles are increasingly vulnerable.

With legislative gridlock likely, the president will focus on enacting his foreign policy objectives, where the executive has much more leeway for action without congressional approval (see ‘US Mid-Terms Portend More Scrutiny But Limited Change Of Foreign Policy’, 7 November). The focus is likely to remain on Asia and the Middle East, with the ongoing rapprochement with North Korea, the trade war with China, and the re-imposition of sanctions on Iran all likely to dominate the president's agenda in the coming months.

Both parties have some cause for celebration or relief when looking at the 36 governorships up for grabs in the major state-level elections. The Democrats made seven gains, a significant swing, including in states such as Wisconsin, Kansas, and Michigan, all of which voted for Trump in the 2016 presidential election. However, the Republicans held onto the governors’ mansions in both Florida and Ohio, two crucial delegate-heavy swing states. The party holding the state governorship has important implications for the re-districting process, which will have a major bearing on which party has the more advantageous position in the state going into the 2020 presidential election.